U.S. and Canadian banks are all but certain to cut personnel costs as the COVID-19 shock gives way to more long-term economic problems, even though the CEOs of some banks pledged this past spring to not lay off employees, per sources as reported by Reuters on Friday (Aug. 28).
Industry experts cited by Reuters attribute their predictions to factors including low interest rates, credit problems among potential borrowers and efficiencies generated by work-from-home programs.
“No question, layoffs (will) come across the board for all the banks,” Barry Schwartz, chief investment officer at Toronto-based Baskin Wealth Management, told Reuters. His firm invests in J.P.Morgan Chase and other banks.
The cuts are likely to fall between 5 percent and 10 percent of current headcounts, Reuters quotes Alan Johnson, head of compensation consultancy Johnson Associates Inc., as saying. Johnson estimates that most of the cuts will come in technology, human resources and finance.
“Everyone has been surprised by how much more efficient you can be (with employees working from home),” he added. “Later this year or early next year, (managers will) look around and say, ‘we just have many more people than we need.’”
Reuters quoted Dennis Baden, partner in charge at executive search firm Heidrick & Struggles, as saying: “We didn’t see a lot of restructuring or layoffs with the banks (earlier in the pandemic). We’re starting to see it now … things will get a little bit worse … and we might see an increase in restructuring.”
Reuters noted that banks recently making or announcing cuts include J.P.Morgan Chase & Co. and Wells Fargo.
Bloomberg reports that European banks cutting jobs in significant numbers include HSBC Holdings Plc., Deutsche Bank and Credit Suisse.
Financial News reports that Japan’s Nomura is planning, or recently made, cuts in London and the United States.